Skimming the top
Discussion
Sorry for a newbie question here. But in the last week I've seen the gains on my vanguard tracker go from 140 quid to over 500. It's been fluctuating for a while, but should you skim the top? Or just cash in completely and wait for the dip and buy again?
Transaction costs are a fiver on iweb. I just wondered should I do this or just ride it as it's a long term investment and accept the gains and losses not trying to second guess the market, which is what this product is really about. Guess I just got bored of watching it fluctuate so much over the last 3 months and wondered what everyone else does. It's about 15k.
Transaction costs are a fiver on iweb. I just wondered should I do this or just ride it as it's a long term investment and accept the gains and losses not trying to second guess the market, which is what this product is really about. Guess I just got bored of watching it fluctuate so much over the last 3 months and wondered what everyone else does. It's about 15k.
The Green Triangle said:
Sorry for a newbie question here. But in the last week I've seen the gains on my vanguard tracker go from 140 quid to over 500. It's been fluctuating for a while, but should you skim the top? Or just cash in completely and wait for the dip and buy again?
There are no gains at this point (only on paper). You have the same number of units that you previously had.The Green Triangle said:
Transaction costs are a fiver on iweb. I just wondered should I do this or just ride it as it's a long term investment and accept the gains and losses not trying to second guess the market, which is what this product is really about. Guess I just got bored of watching it fluctuate so much over the last 3 months and wondered what everyone else does. It's about 15k.
The transaction costs would be significant (in %age of profit terms) if you buy and sell regularly and this fund is really a the long term hold play. Although a fiver is low, this would add up if you buy and sell every time you see a £100 rise or fall. I started doing something similar a few years ago and spent the early months constantly watching every up and down. It took a while for me not to think the same things as you regarding short term ups and downs and to concentrate on the strategy.
I have to remind/ask myself a few things.
1) What you paid for it then and whether it is up or down now is irrelevant - that was then and this is now. It is only worth x today and not what you paid for it.
2) This is a long term play - the timeframe is 20 years and not 2 months.
3) If you took the money out, where else would you put it?
and the most important one
4) Ignoring what you paid for it, does it still represent good value today? If you had the money and not the holding would you buy/sell this position today.
i.e. don't be emotional about what you paid for it. The only thing that matters is "is it still a good investment at today's level?"
In addition to previous comments re your 3% gain you should also check your fund for redemption fees and blocks.
Funds often have them in the small print, check the expenses for details.
Fees are often around 2% for periods of less than 90 days.
There are also sometimes "blocks" which prevent you from re buying, typically 30 days.
They are valid restrictions intended to prevent frequent trading in open ended funds.
If you feel this is the way you want to handle your investments than perhaps use ETFs.
But, why not just save a little each month and buy on a correction
Funds often have them in the small print, check the expenses for details.
Fees are often around 2% for periods of less than 90 days.
There are also sometimes "blocks" which prevent you from re buying, typically 30 days.
They are valid restrictions intended to prevent frequent trading in open ended funds.
If you feel this is the way you want to handle your investments than perhaps use ETFs.
But, why not just save a little each month and buy on a correction
Thanks, that's confirmed my thoughts. Due to the fluctuations I was seeing, I was thinking of just cashing in and repurchasing as and when the peaks and troughs occured. However, I guess it's tough to predict and I didn't think of the transaction costs as a percentage of profits.
It is a long term strategy - well as long as something with four wheels doesn't tempt me away. Guess sit tight and don't look at it too often.
It is a long term strategy - well as long as something with four wheels doesn't tempt me away. Guess sit tight and don't look at it too often.
xeny said:
I'd leave it alone - the direction of the next fluctuation is inherently unpredictable, so you're about as likely to sell before a rise as a dip, and you're incurring trading costs each time.
Spot on.
Suggest OP reads Warren Buffett's quotes. The one which directly answers his question is;
“The Dow started the last century at 68 and ended at 11,497. How could you lose money during a period like that? A lot of people did, because they tried to dance in and out.”
Remember also during the 20th century, there were periods of tremendous troubles.
http://uk.businessinsider.com/warren-buffetts-inve...
If one knew if the market would fall, you could make millions!
To be honest it could go either way. Next month when the Bank of England meets and lets say they bottle it and don't increase interest rates (and only 2 members of the MPC vote for an increase), the GBP could fall quite a bit (espically as the Bank has hinted of an increase and the markets are anticipating it )
A large fall in the Sterling would cause share prices to rise due to overseas earnings being worth more.
To be honest it could go either way. Next month when the Bank of England meets and lets say they bottle it and don't increase interest rates (and only 2 members of the MPC vote for an increase), the GBP could fall quite a bit (espically as the Bank has hinted of an increase and the markets are anticipating it )
A large fall in the Sterling would cause share prices to rise due to overseas earnings being worth more.
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